| 17. | DEFERRED TAXATION |
The following are the major deferred tax (assets) liabilities recognized and movement thereon during the current and prior reporting periods.
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| on acquisition | ||||||||||||||||||||||||||||||||
| Undistributed | Fair value | of Zhengxing | ||||||||||||||||||||||||||||||
| Unrealized | profits | adjustment | Wheel | |||||||||||||||||||||||||||||
| profit in | of PRC | Deferred | on trade | other than | ||||||||||||||||||||||||||||
| inventories | subsidiaries | income | names | trade names | Tax loss | Others* | Total | |||||||||||||||||||||||||
| RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | RMB’000 | |||||||||||||||||||||||||
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At January 1, 2016 |
(302 | ) | 53,355 | (1,514 | ) | 4,250 | 19,980 | (15,708 | ) | 9,265 | 69,326 | |||||||||||||||||||||
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Charge (credit) to profit or loss |
(235 | ) | — | 119 | — | (562 | ) | (7,578 | ) | 380 | (7,876 | ) | ||||||||||||||||||||
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At December 31, 2016 |
(537 | ) | 53,355 | (1,395 | ) | 4,250 | 19,418 | (23,286 | ) | 9,645 | 61,450 | |||||||||||||||||||||
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Charge (credit) to profit or loss |
182 | — | 120 | — | (559 | ) | 953 | 406 | 1,102 | |||||||||||||||||||||||
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Attributable to change in tax rate |
— | — | — | — | (141 | ) | — | (1,241 | ) | (1,382 | ) | |||||||||||||||||||||
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At December 31, 2017 |
(355 | ) | 53,355 | (1,275 | ) | 4,250 | 18,718 | (22,333 | ) | 8,810 | 61,170 | |||||||||||||||||||||
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| US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | US$’000 | |||||||||||||||||||||||||
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At December 31, 2017 |
(54 | ) | 8,201 | (196 | ) | 653 | 2,877 | (3,433 | ) | 1,354 | 9,402 | |||||||||||||||||||||
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| * | Others include impairment loss on property, plant and equipment, and interest expense capitalized in construction in progress. |
For the purpose of presentation in the consolidated statements of financial position, certain deferred tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances in the consolidated statements of financial position for financial reporting purposes:
| As of December 31, | ||||||||||||
| 2016 | 2017 | 2017 | ||||||||||
| RMB’000 | RMB’000 | US$’000 | ||||||||||
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Deferred tax assets |
(23,836 | ) | (25,500 | ) | (3,919 | ) | ||||||
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Deferred tax liabilities |
85,286 | 86,670 | 13,321 | |||||||||
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| 61,450 | 61,170 | 9,402 | ||||||||||
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At the end of each reporting period, the Group had the followings unused tax losses:
| As of December 31, | ||||||||||||
| 2016 | 2017 | 2017 | ||||||||||
| RMB’000 | RMB’000 | US$’000 | ||||||||||
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Unused tax losses |
140,427 | 144,766 | 22,250 | |||||||||
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As of December 31, 2017 and 2016, a deferred tax asset has been recognized in respect of RMB144,767,000 (US$22,250,000) and RMB 130,747,000 of such losses, respectively. No deferred tax asset in relation to unused tax losses has been recognized in respect of the remaining RMB Nil and RMB9,680,000 to the years ended December 31, 2017 and 2016, respectively, due to the unpredictability of future profit streams. The unused tax losses could be carried forward to offset future taxable profit for five years from the year of origination and will expire at various dates up to and including 2020.
Under the PRC EIT law, withholding income tax is imposed on dividend paid by PRC entities out of its profits earned since January 1, 2008 to its overseas investors (including Hong Kong investors). Deferred taxation on the undistributed profits of the PRC subsidiaries has been provided in the consolidated financial statements to the extent that in the opinion of the directors of the Company such profits will be distributed in the foreseeable future.
The aggregate amount of temporary differences associated with undistributed earnings of subsidiaries for which deferred tax liabilities have not been recognized as of December 31, 2017 and 2016 were RMB1,176,892,000 (US$180,885,000) and RMB1,157,854,000, respectively, as the Group is able to control the timing of the reversal of such temporary differences and it is probable that such temporary differences will not reverse in the foreseeable future.